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Physician Supply: The supply of physician office visits is given by QS=40P-1000, and demand for physician office visits is QD=6000-60P.
a. If the market is perfectly competitive, what are the equilibrium price and quantity?
b. Suppose there is an entry barrier that prevents new physicians from entering the market, which limits QS ≤ 1200. What is the market price given this entry barrier?
c. How much total welfare (consumer surplus + producer surplus) is lost because of the entry barrier?
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